2026 (5) TMI 1024

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....issioner of Customs & Central Excise, Hyderabad. 2. The fact in brief M/s Logos Travels is engaged in providing "Rent-a-Cab Operator Service", a taxable service under the Finance Act, 1994. The appellant obtained Service Tax registration on 29.09.2004 and was filing ST-3 returns, during an audit / investigation, it was observed that the appellant had failed to fully pay the Service Tax liability for period of dispute 2004-05 to 2008-09. Appellant deposited a substantial sum of Rs. 63,78,452/- towards Service Tax liability before the issuance of Show Cause Notice. Subsequently, a Show Cause Notice, bearing O.R. No.10/2009-Adjn. (Commnr) (S.Tax) was issued, demanding Rs. 2,48,82,269/-, invoking extended period of limitation under the provi....

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....t the Learned Commissioner erred in determining the Service Tax demand payable at 1,12,46,860/- when such demand is already paid by the appellant. The Learned Commissioner ought to have given credit for the Service Tax demand of Rs. 63,78,452/- that was paid before issuance of Show Cause Notice, and the amount paid after issuance of Show Cause Notice. The appellant in fact has paid entire demand of Rs. 1,12,46,860/- and there is no Service Tax due. Therefore, the demand is not sustainable. 7. Learned Commissioner erred in imposing penalty under Sections 70, 77 and 78 of the Finance Act. There is no mens rea and appellant not evaded payment of Service Tax willfully. 8. Learned Counsel for the appellant relied on the following decisions....

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....judicating Authority has not considered these facts. 13. Appellant in his support relied on the decision of the CESTAT, Chennai Bench in MSR Constructions, supra, wherein, held that since major portion of the tax due had been paid prior to issuance of the Show Cause Notice and the remaining amount was also paid, the penalty was set aside by extending the benefit under Section 80 of the Finance Act, 1994. 14. The appellant had collected Service Tax from the recipient of the service and had also shown the same as tax liability. However, the amount was not paid to the department. Thus, despite collecting Service Tax, failure to deposit the same cannot be considered a reasonable cause for non-payment under Section 80 of the Finance Act, 1....